2025 (11) TMI 185 - HC - GST

Impugned demand orders set aside; matter remanded for fresh adjudication after denial of effective notice and hearing

Ess Dee Industries Through Its Partner Shambhu Dayal Sharma Versus Commissioner of DGST & Ors.

HC held the impugned demand orders set aside and remanded the matter to the Adjudicating Authority for fresh adjudication, observing violation of ... Violation of principles of natural justice - the impugned order was passed without providing the Petitioner with an opportunity to challenge the case on merits - challenge to N/N. 9/2023-Central Tax dated 31st March, 2023 and N/N. 09/2023-State Tax dated 22nd June, 2023 - HELD THAT:- In fact, this Court in Neelgiri Machinery through its Proprietor Mr. Anil Kumar V. Commissioner Delhi Goods And Service Tax And Others [2025 (3) TMI 1308 - DELHI HIGH COURT], under similar circumstances where the SCN was uploaded on the ‘Additional Notices Tab’ had remanded the matter holding that 'The impugned demand orders dated 23rd April, 2024 and 5th December, 2023 are accordingly set aside. In response to show cause notices dated 04th December, 2023 and 23th September, 2023, the Petitioner shall file its replies within thirty days. The hearing notices shall now not be merely uploaded on the portal but shall also be e-mailed to the Petitioner and upon the hearing notice being received, the Petitioner would appear before the Department and make its submissions. The show cause notices shall be adjudicated in accordance with law.' There is no doubt that after 16th January 2024, changes have been made to the GST portal and the ‘Additional Notices Tab’ has been made visible. However, in the present case, the SCN was issued on 11th December, 2023 and the same was not brought to the notice of the Petitioner. Under such circumstances, considering the fact that the Petitioner did not get a proper opportunity to be heard and no reply to the SCN has been filed by the Petitioner, the matter deserves to be remanded back to the concerned Adjudicating Authority. The Petitioner is granted time till 30th November, 2025, to file the reply to impugned SCN. Upon filing of the reply, the Adjudicating Authority shall issue to the Petitioner, a notice for personal hearing - petition allowed by way of remand. ISSUES PRESENTED AND CONSIDERED 1. Whether adjudication orders passed without effective notice (where Show Cause Notice (SCN) was uploaded only on the portal's 'Additional Notices' tab and not brought to the notice of the addressee) violate principles of natural justice and require remand for fresh adjudication. 2. Whether the challenge to Notifications issued under Section 168A of the Central GST Act (extending limitation for adjudication) can be decided by this Court in view of cleavages of opinion among High Courts and pending proceedings before the Supreme Court. 3. Remedy and directions appropriate where an SCN was not effectively communicated and the addressee did not get an opportunity to file a reply or obtain personal hearing, including whether prior orders of this Court and other High Courts on analogous facts are controlling. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Validity of adjudication passed without effective notice where SCN was uploaded on 'Additional Notices' tab Legal framework: Principles of natural justice require that a noticee be given effective notice of proceedings, reasonable opportunity to file reply and to be heard personally before adjudicatory orders are passed. Administrative communication via statutory/official portals must ensure actual notice to the affected person. Precedent treatment: This Court and other High Courts have repeatedly addressed situations where notices were made available only under an obscure portal tab, holding that orders passed in default in such circumstances require remand for fresh adjudication (cases of this Court cited internally). Earlier orders of this Court remanded similar matters to ensure fair opportunity to reply and personal hearing. Interpretation and reasoning: The Court observed that the impugned SCN dated 11 December 2023 was uploaded on the 'Additional Notices' tab and was not brought to the petitioner's attention; consequently no reply was filed and the impugned order was passed ex parte. Although portal visibility was later improved (post 16 January 2024), that remedial change does not cure lack of effective notice at the relevant time. The absence of a meaningful communication channel (email/mobile) and absence of personal hearing rendered the adjudication procedurally defective. Ratio vs. Obiter: Ratio - where an SCN is not effectively communicated such that the noticee has no real opportunity to respond or appear for personal hearing, the resulting adjudicatory order is vitiated by breach of principles of natural justice and must be set aside and remanded for fresh adjudication. Observations about portal improvements are obiter to the extent they do not excuse prior procedural failings. Conclusions: The impugned adjudication order is set aside. The noticee is permitted a fixed period (till 30 November 2025 as ordered) to file reply to the SCN. Upon filing, the Adjudicating Authority must issue a personal hearing notice communicated by e-mail and mobile (specific contact furnished) and adjudicate afresh after considering the reply and oral submissions. Issue 2 - Challenge to Notifications under Section 168A (extension of limitation): whether this Court should decide validity in view of divergent High Court views and pending Supreme Court proceedings Legal framework: Section 168A (as invoked) concerns extension of time-limits for adjudication; validity of executive notifications under this provision raises questions of vires and compliance with prescribed procedure (including prior recommendation by GST Council where relevant). Precedent treatment: Multiple High Courts have taken divergent views - some upholding particular notifications, others quashing them. The Telangana High Court's observations on invalidity are presently subject to Special Leave Petition before the Supreme Court; other High Courts have refrained from adjudicating final vires. This Court has previously stayed or made its decisions subject to the outcome before the Supreme Court in related matters. Interpretation and reasoning: Recognizing a clear cleavage of opinions and the fact that the issue is sub judice before the Supreme Court, the Court declined to adjudicate the vires of the impugned Central Notifications in these proceedings. Where parallel State Notifications are involved and retained for consideration, the Court addressed the matter on facts; but in respect of the central issue of validity of the contested notifications under Section 168A the Court left the question open and made any adjudicatory order subject to the final decision of the Supreme Court. Ratio vs. Obiter: Ratio - where a closely related issue is pending before the Supreme Court and there is a division of High Court authority, it is appropriate judicial discipline to refrain from final determination and to make interim or prospective reliefs subject to outcomes of the higher forum. Observations summarizing other courts' decisions are obiter and factual background. Conclusions: The Court refrained from finally deciding the vires of the impugned notifications under Section 168A and expressly left the issue open, making any order passed by the Adjudicating Authority subject to the outcome of the pending Supreme Court proceedings. Issue 3 - Appropriate remedial directions and interplay with appellate remedies and prior interim orders Legal framework: Remedies include setting aside void or procedurally defective orders, remanding for fresh adjudication, and permitting exercise of appellate or other statutory remedies. Courts may give interim directions to preserve rights pending higher adjudication. Precedent treatment: This Court's prior orders in analogous cases remanded matters where notices were not effectively communicated and directed that hearing notices be emailed besides portal uploading; other High Courts have adopted similar interim measures while awaiting Supreme Court determination. Interpretation and reasoning: The Court classified cases into categories and, while leaving central vires issues to the Supreme Court, provided relief tailored to this factual matrix: set aside the impugned order(s), allow filing of replies within a specified timeline, mandate personal hearings with notice communicated by e-mail and mobile number, and direct adjudication afresh in accordance with law. The Court also indicated that in some cases parties may be allowed to pursue appellate remedies without the Court deciding the notifications' validity at this stage. Ratio vs. Obiter: Ratio - procedural defects affecting the right to be heard should be remedied by remand and clear directions to ensure effective notice and hearing; such remedies can be granted while leaving substantive vires questions to the higher court. The categorization of cases for differential relief is operative and binding in this context; remarks on other benches' orders serve explanatory purposes. Conclusions: Procedural relief granted - impugned orders set aside; time granted to file replies; requirement that hearing notices be emailed and mobile-contacted in addition to portal uploading; Adjudicating Authority to consider replies and personal hearing submissions and pass fresh orders; all such orders subject to the Supreme Court's eventual determination on the notifications. Pending applications disposed accordingly.